The review: the financial planning equivalent of satnav

By David Lamb CFP™ MCSI 

I ended my last blog by saying you could sit back and relax for 12 months on completion of the implementation stage of your financial plan. After this first year the next stage is your initial review.

A financial plan is always work in progress and one of the worst things a financial planner can do for their clients is not to provide regular reviews.

Nowadays, most cars have a satnav, which constantly reviews your progress towards your destination. If you take a wrong turn, it will warn you and advise you how to get back to your planned route.

Your financial review is your ’moneynav’ and should include:

  • Your objectives – What have you achieved? Are there any new objectives we need to plan for?
  • Current position – What has changed since the last version of the plan? Income, expenditure assets and liabilities statements should be updated.
  • Investments – Are adjustments to take into consideration revised objectives? If still accumulating wealth, are the investments on target to achieve ’Enough’? If decumulating, and you are never going to run out of money, how are the investments performing against inflation? For both scenarios, do we need to make some amendments? Different asset classes perform in different ways; does your portfolio still match your investment risk profile? If not, we may need to rebalance to the ‘shape’ of your original portfolio (all our clients are automatically rebalanced once a year, at no charge).
  • Estate planning – Have there been changes within your family, or with legislation that we need to consider?
  • Assumptions – Do these need adjusting to adapt to your changing circumstances or the economic environment? At present, inflation springs to mind!
  • Taxation and legislation – Are there any changes that we need to consider? Recent changes to capital gains tax and pensions have made some clients change their strategy.

Your review is not just about looking back, it’s also about planning going forward; what are you going to do next?

In some instances, there may be significant changes where a completely new financial plan may be required. But usually the existing plan can be updated and amended.

My favourite part of the review is catching up with the progress of our client’s bucket lists.  We have some lovely photos in our office from clients who have been ticking off their lists, including watching orangutans in Borneo, Route 66 on a Harley Davidson, wild camping and the results of some fantastic charitable donations.

Just remember though, financial planning is like exercise; you can’t go to the gym once and be fit for life, you must keep going!